Home assignments, week 1

Student ………………………………………………………….

1-1. (Topic 1) Grand Inc produces model cars. At the end of December, 2020 their accounting records are
as follows:
Inventories: Beginning Ending
Direct Materials $10,000 $5,000
Work-in-Process 15,000 20,000
Finished Goods 0 5,800
Other Information:
Direct Materials Purchases 40,000
Plant maintenance services 6,800
Plant supervisor's salary 31,500
Sales salaries 12,700
Delivery costs 3,100
Sales revenue 236,000
Utilities for plant 10,500
Rent on plant 23,000
Advertising 8,000
Direct labor 30,000

Required:
(a) Prepare a schedule of cost of goods manufactured for Grand Inc and
(b) Prepare an income statement for Grand Inc for the year ended December 31, 2020
(c) The company has received a bulk order from a domestic client. As a result, the revenues of this year
are expected to be meaningfully higher than the estimates of analysts. Jane, an accountant at Grand Inc,
informs one of her friends about this. Which IMA standard has she violated?

Answer:

1
1-2. (Topic 1) Nestle Company’s records provided the following information for the current year:

Beginning Balance—Work-in-Process Inventory $24,000

Ending Balance—Work-in-Process Inventory 58,000
Beginning Balance— Direct Materials Inventory 85,000
Ending Balance— Direct Materials Inventory 61,000
Purchases — Direct Materials 359,000
Direct Labor 470,000
Indirect Labor 21,000
Depreciation on Factory Plant and Equipment 24,000
Plant Utilities and Insurance 268,000

Required: Calculate the amount of the manufacturing overhead costs.

Answer:

2
2-1. (Topic 2) Journalize the following transactions for Neptune Furniture Inc:
a. Incurred and paid advertising expenses, $3,500.
b. Incurred manufacturing wages of $30,000, 60% of which was direct labor and 40% of which was
indirect labor. Wages will be paid at a later date.
c. Purchased raw materials on account, $27,000.
d. Used in production: direct materials, $12,000; indirect materials, $5,500
e. Recorded manufacturing overhead: depreciation on plant, $14,000; plant insurance (previously paid),
$1,800; plant property tax, $4,500 (credit Property Tax Payable).
f. Allocated manufacturing overhead to jobs, 150% of direct labor costs.
g. Completed production on jobs with costs of $55,000.
h. Sold inventory on account, $64,000; cost of goods sold, $35,000. The company uses the perpetual
inventory system.
i. Adjusted for overallocated or under-allocated overhead.

Answer:

3
3-1. (Topic 3) Meblo produces wooden chairs and uses activity-based costing for allocation of the
manufacturing conversion costs. Each chair uses $240 in direct materials, consists of 20 parts, and
necessitates 5 hours of machine time to produce. Additional information is provided in the table below:

Activity Allocation Base Cost Allocation Rate

Materials handling Number of parts $2.00 per part
Machining Machine hours $2.75 per machine hour
Assembling Number of parts $1.00 per part
Packaging Number of finished units $3.00 per finished unit

Required:
(a) Calculate the total manufacturing cost per chair.
(b) Meblo would like to bid on selling 150 chairs to Double Tree Hilton Hotel. Assuming that Meblo
wants a 25% markup on total costs, what is the bid price that the company should use to bid for
the Double Tree Hilton Hotel request for proposals?

Answer: